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In the middle of a major accounting-system changeover, Siim Vanaselja, CFO of Bell Canada Enterprises, pines for the new year, when he’ll have just one set of books to worry about. For now, the communications company uses a trio of accounting rules: Canadian generally accepted accounting principles, international financial reporting standards, and U.S. GAAP.

Cutting that number down is one benefit of Canada’s mandate that all of its publicly traded companies, with a few exceptions, adopt IFRS starting January 1, 2011. In the meantime, financial reporting for Canadian CFOs has not been easy. “This is probably the most complicated year in terms of what the IFRS transition means,” says Vanaselja, who estimates he has spent 10% of his time on the project. “Once we have fully implemented the new standards, then we’ll be reporting on a single basis again.”

Canadian CFOs’ preparedness for the wholesale adoption of IFRS has varied by the size of their company, their industry, and their approach to the massive switchover. Most telling will be the next round of quarterly reports, where they’re supposed to quantify the predicted effects of the change. The majority of them are running parallel IFRS/Canadian GAAP accounting systems this year, as companies with calendar year-ends are expected to apply IFRS to first-quarter filings made in 2011 and also have a comparative year to share.

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The work has involved spending the past two years or more exploring the differences between their local GAAP and IFRS; training their staff; and keeping their boards, investors, and lenders informed about how the transformation will affect their IT systems, internal controls, and financial results. Their experience offers a preview of what U.S. CFOs will encounter if the Securities and Exchange Commission decides to require U.S. publicly traded companies to also adopt IFRS.

Little Choice for ChangeFour years ago, Canada’s standard-setters chose IFRS over U.S. GAAP in the belief that continuing to update the country’s rules would no longer be worth the cost or trouble and that the American rules were too detailed (and therefore too expensive) to adopt. The change comes with a few advantages for Canadian companies, including the presumption that by adopting the popular international standards, the country’s businesses will become more comparable on a global level.

Moreover, once the conversion work is done, Canadian companies that are listed in the United States, such as Bell Canada, will no longer need to reconcile their financial statements with U.S. GAAP for their SEC filings, since the regulator accepts IFRS (without modification) from its foreign filers.

Still, some companies have eschewed the move altogether. For instance, high-profile Canadian companies Biovail and Research in Motion are sticking with their use of U.S. GAAP, an allowance given to Canadian companies that solely use the American rules and are listed on U.S. exchanges (both companies also sell shares on the Toronto Stock Exchange). In its most recent annual filing with the SEC, Biovail said its loyalty to U.S. GAAP lies in its ability to provide “better comparability with our U.S.-based industry peers.”

Other companies that lack the allowance and fear that a switch to IFRS will make them less comparable with their U.S. counterparts have lobbied the International Accounting Standards Board to change its rules. And they’ve had some near-success: for instance, rate-regulated utilities, such as Fortis, will likely get a two-year reprieve from Canada’s 2011 deadline. Fortis CFO Barry Perry halted his IFRS project — begun three years ago — just last month when Canadian standard-setters proposed a deadline extension for his industry. Unlike U.S. and Canadian accounting rules, IFRS does not recognize assets and liabilities related to regulated activities on the balance sheet. If Fortis adopted IFRS in its current form, the utility would have volatile earnings and would need to maintain two sets of books, one for accounting purposes and the other for regulators that set its rates, according to Perry.

The IASB had been considering a new standard that would more closely align with Canadian and U.S. accounting guidance on this issue but recently tabled the discussion. “That left us in a very precarious position, because we’re sitting here having to change over as of January 1, 2011, and we didn’t know what the standard would be for regulatory assets and liabilities,” says Perry. Canadian standard-setters will vote on the proposal to stretch rate-regulated utilities’ IFRS-switchover deadline to 2013 later this year.

To be sure, for every company pushing back on the current version of IFRS, there is a willing volunteer. Jayden Resources and Newstrike Resources, for example, have already begun reporting under IFRS after regulators approved their requests for early adoption. And some privately held companies are obeying the same edict as their public peers. For example, McCain Foods, known for its frozen French fries, makes it a habit to follow the same rules imposed on public companies, and the IFRS mandate is no exception. Moreover, Richard Burton, corporate controller of McCain, buys into the comparability benefits for companies worldwide to adopt IFRS. After all, he says, as a multinational business, McCain is a “poster child for IFRS in the first place.”

With a fiscal year-end of September 30, McCain has a longer time frame than most public companies for its self-imposed IFRS changeover. But even with the extra time, the work can be difficult as the company has to keep tabs on the ever-changing standards while also figuring out how to apply the rules across its more than 120 worldwide subsidiaries. Indeed, as Canadians are in the thick of an IFRS switch, the U.S. and international rulemakers are in the middle of the meatiest part of their efforts to meld their standards, which is leading to overhauls of significant rules. “IFRS is going through a higher-than-usual number of changes, and that’s an extra challenge,” says Burton, who estimates he has spent at least 25% of his time on the switch.

Looming DeadlineAs 2010 begins to wind down, Canadian regulators are worried about some companies’ ability to meet the IFRS adoption deadline. In a recent review of Canadian companies’ disclosures about their conversion progress in their 2009 annual filings, the Canadian Securities Administrators found that nearly all of the 196 calendar year-end companies it reviewed had some sort of changeover plan. However, the regulator warned in a July document that for the 5% that didn’t have one, “we are concerned that issuers…may be at greater risk of not meeting their future filing obligations.”

Indeed, companies are at varying stages with their adoption efforts. “We’ve seen many companies who are well under way and have their financial statements mocked up in draft form, and we have seen other organizations that are in crunch time and will be from now to December and January,” says Diane Kazarian, national IFRS leader for PricewaterhouseCoopers in Canada.

In general, larger Canadian companies are more ready for the January 1 deadline since they have more internal resources and, because of their complexity, were more likely to begin the switchover project early, says Kazarian. According to a survey earlier this year by FEI Canada and PwC, all companies with annual revenues above $20 billion had more than halfway completed their conversions, whereas only 41% of companies with revenues between $50 million and $249 million were at least 60% of the way toward completion.

CFOs acknowledge the tendency to procrastinate, but warn U.S. finance chiefs not to wait if the SEC moves forward with IFRS. “When you read the accounting standards, they don’t seem drastically different, but when you get into the detailed work you realize it’s a huge amount of work,” says Sarah Davis, CFO of Loblaw, a food distributor. “We were caught off-guard a bit by how much work it was to implement.”

Earlier this year, the SEC said it would decide in 2011 whether to move forward with a time line for requiring U.S. publicly traded companies to apply IFRS to their financial statements beginning in 2015. Unlike Canadian businesses, the United States would likely phase in companies to its three-year plan, based on size.

For now, the SEC is asking for further feedback on the issue. Giving the public until mid-October to respond, the commission wants to know about investors’ readiness for understanding IFRS and how they can get up to speed on the global rules. The commission also wants to know how an IFRS switch will affect business contracts and corporate-governance requirements.